##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549


FORM 10-Q

|        |  |                                                                                                                                         
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|[ X ]   |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended
December 31, 2002
|        |  |                                                                                                                                         
|[     ] |  | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934                                                

Commission File Number 1-10981

SBS TECHNOLOGIES, INC.

|                                                                          |  |                                                
|------------------------------------------------------------------------- |  | -----------------------------------------------
|New Mexico
(State or other jurisdiction of
incorporation or organization) |  | 85-0359415
(IRS Employer Identification Number)

2400 Louisiana Blvd. NE
AFC Building 5, Suite 600
Albuquerque, New Mexico 87110
(505) 875-0600

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

YES [ X ] NO [     ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

YES [ X ] NO [     ]

As of February 4, 2003, the Registrant had 14,602,308 shares of its common
stock outstanding.





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TABLE OF CONTENTS



|                                                 |                                                                                       |  |  |  |  |  |  | 
|------------------------------------------------ | ------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|                                                 | Consolidated Balance Sheets                                                          
|                                                 | Consolidated Statements of Operations                                                
|                                                 | Consolidated Statement of Changes in Stockholders Equity                            
|                                                 | Consolidated Statements of Cash Flows                                                
|                                                 | Notes to Condensed Consolidated Financial Statements  Unaudited                     
|                                                 | Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                 | Quantitative and Qualitative Disclosures about Market Risk                           
|                                                 | Controls and Procedures                                                              
|PART II  OTHER INFORMATION                     
|                                                 | Item 1. Legal Proceedings                                                            
|                                                 | Item 4. Submission of Matters to a Vote of Security Holders                          
|                                                 | Item 6. Exhibits and Reports on Form 8-K.                                            
|SIGNATURES                                      
|CERTIFICATIONS                                  
|EXHIBIT INDEX                                   
|EX-99.1 Certification of Chairman and CEO       
|EX-99.2 Certification of Chief Financial Officer



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##### Table of Contents



SBS Technologies, Inc. and Subsidiaries
Form 10-Q for the Quarter Ended December 31, 2002
Table of Contents

|               |                         |  |  |          |                                                                                               |  |      |  | 
|-------------- | ----------------------- |  |  | -------- | --------------------------------------------------------------------------------------------- |  | ---- |  | 
|               |                         |  |  |          |                                                                                               |  | Page
|PART I         |  FINANCIAL INFORMATION |  | 
|               |                         |  |  | Item 1  | Unaudited Condensed Financial Statements                                                      |  |     
|               |                         |  |  |          | Consolidated Balance Sheets as of December 31, 2002 and June 30, 2002                         |  | 2    | 
|               |                         |  |  |          | Consolidated Statements of Operations, Six and
Three Months Ended December 31, 2002 and 2001  |  | 3    | 
|               |                         |  |  |          | Consolidated Statement of Changes
in Stockholders Equity, Six Months Ended December 31, 2002 |  | 4    | 
|               |                         |  |  |          | Consolidated Statements of Cash Flows,
Six Months Ended December 31, 2002 and 2001            |  | 5    | 
|               |                         |  |  |          | Notes to Unaudited Condensed Consolidated Financial
Statements as of December 31, 2002        |  | 6    | 
|               |                         |  |  | Item 2  | Managements Discussion and Analysis of Financial
Condition and Results of Operations         |  | 14   | 
|               |                         |  |  | Item 3  | Quantitative and Qualitative Disclosures about Market Risk                                    |  | 26   | 
|               |                         |  |  | Item 4  | Controls and Procedures                                                                       |  | 26   | 
|PART II        |  OTHER INFORMATION     |  |  |          |                                                                                              
|               |                         |  |  | Item 1  | Legal Proceedings                                                                             |  | 27   | 
|               |                         |  |  | Item 4  | Submission of Matters to a Vote of Security Holders                                           |  | 27   | 
|               |                         |  |  | Item 6  | Exhibits and Reports on Form 8-K                                                              |  | 28   | 
|SIGNATURES     |                         |  |  | 29       |                                                                                              
|CERTIFICATIONS |                         |  |  | 30       |                                                                                              
|EXHIBIT INDEX  |                         |  |  | 32       |                                                                                              





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##### Table of Contents






SBS Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
Thousands (except share amounts)
(Unaudited)

|                                     |                                                                                                                                                                       |                                            |        |        |         |              |        |          |         |  |  | 
|------------------------------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------ | ------ | ------- | ------------ | ------ | -------- | ------- |  |  | 
|                                     |                                                                                                                                                                       |                                            |        |        |         | December 31, |        | June 30,
|                                     |                                                                                                                                                                       |                                            |        |        |         | 2002         |        | 2002    
|                                     |                                                                                                                                                                       |                                            |        |        |         |              |        |         
|Assets                              
|Current assets:                      |                                                                                                                                                                       |                                            |        |        |         |              |        |         
|                                     | Cash and cash equivalents                                                                                                                                             |                                            | $      | 25,155 |         |              |        | 24,811   |        
|                                     | Receivables, net                                                                                                                                                      |                                            |        | 24,171 |         |              |        | 22,619   |        
|                                     | Inventories                                                                                                                                                           |                                            |        | 19,256 |         |              |        | 18,428   |        
|                                     | Deferred income taxes                                                                                                                                                 |                                            |        | 6,930  |         |              |        | 9,446    |        
|                                     | Income tax receivable                                                                                                                                                 |                                            |        | 7,296  |         |              |        | 4,584    |        
|                                     | Prepaid expenses                                                                                                                                                      |                                            |        | 1,986  |         |              |        | 1,226    |        
|                                     | Other current assets                                                                                                                                                  |                                            |        | 133    |         |              |        | 165      |        
|                                     |                                                                                                                                                                       |                                            |        |        |         |              |        |         
|                                     |                                                                                                                                                                       | Total current assets                       |        |        | 84,927  |              |        |          | 81,279  | 
|                                     |                                                                                                                                                                       |                                            |        |        |         |              |        |         
|Property and equipment, net          |                                                                                                                                                                       |                                            | 10,197 |        |         |              | 11,507 |         
|Goodwill, net                        |                                                                                                                                                                       |                                            | 21,075 |        |         |              | 20,468 |         
|Intangible assets, net               |                                                                                                                                                                       |                                            | 5,447  |        |         |              | 6,284  |         
|Deferred income taxes                |                                                                                                                                                                       |                                            | 5,391  |        |         |              | 5,703  |         
|Other assets                         |                                                                                                                                                                       |                                            | 389    |        |         |              | 407    |         
|                                     |                                                                                                                                                                       |                                            |        |        |         |              |        |         
|                                     |                                                                                                                                                                       | Total assets                               |        | $      | 127,426 |              |        |          | 125,648 | 
|                                     |                                                                                                                                                                       |                                            |        |        |         |              |        |         
|Liabilities and Stockholders Equity
|Current liabilities:                 |                                                                                                                                                                       |                                            |        |        |         |              |        |         
|                                     | Accounts payable                                                                                                                                                      |                                            | $      | 4,097  |         |              |        | 4,361    |        
|                                     | Accrued representative commissions                                                                                                                                    |                                            |        | 969    |         |              |        | 518      |        
|                                     | Accrued compensation                                                                                                                                                  |                                            |        | 3,646  |         |              |        | 4,170    |        
|                                     | Other current liabilities                                                                                                                                             |                                            |        | 3,263  |         |              |        | 2,926    |        
|                                     |                                                                                                                                                                       |                                            |        |        |         |              |        |         
|                                     |                                                                                                                                                                       | Total current liabilities                  |        |        | 11,975  |              |        |          | 11,975  | 
|                                     |                                                                                                                                                                       |                                            |        |        |         |              |        |         
|Long-term liabilities:               |                                                                                                                                                                       |                                            |        |        |         |              |        |         
|                                     | Other liabilities                                                                                                                                                     |                                            |        | 19     |         |              |        | 27       |        
|                                     |                                                                                                                                                                       |                                            |        |        |         |              |        |         
|                                     |                                                                                                                                                                       | Total liabilities                          |        |        | 11,994  |              |        |          | 12,002  | 
|                                     |                                                                                                                                                                       |                                            |        |        |         |              |        |         
|Stockholders equity:                |                                                                                                                                                                       |                                            |        |        |         |              |        |         
|                                     | Common stock, no par value; 200,000,000 shares authorized, 14,602,308
issued and outstanding at December 31, 2002,
14,628,709 issued and outstanding at June 30, 2002 |                                            |        | 86,329 |         |              |        | 86,338   |        
|                                     | Unearned compensation                                                                                                                                                 |                                            |        | (81    | )       |              |        |         |        
|                                     | Accumulated other comprehensive loss                                                                                                                                  |                                            |        | (1,920 | )       |              |        | (3,113   | )      
|                                     | Retained earnings                                                                                                                                                     |                                            |        | 31,104 |         |              |        | 30,421   |        
|                                     |                                                                                                                                                                       |                                            |        |        |         |              |        |         
|                                     |                                                                                                                                                                       | Total stockholders equity                 |        |        | 115,432 |              |        |          | 113,646 | 
|                                     |                                                                                                                                                                       |                                            |        |        |         |              |        |         
|                                     |                                                                                                                                                                       | Total liabilities and stockholders equity |        | $      | 127,426 |              |        |          | 125,648 | 
|                                     |                                                                                                                                                                       |                                            |        |        |         |              |        |         

See accompanying notes to condensed consolidated financial statements

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SBS Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations
Thousands (except per share amounts)
(Unaudited)

|                                                       |                         |   |                              |        |                                |  |         |         |      |  |        |        |  |  |         |         |  
|------------------------------------------------------ | ----------------------- | - | ---------------------------- | ------ | ------------------------------ |  | ------- | ------- | ---- |  | ------ | ------ |  |  | ------- | ------- | -
|                                                       |                         |   | Six Months Ended December 31 |        | Three Months Ended December 31
|                                                       |                         |   |                              |        |                               
|                                                       |                         |   | 2002                         |        | 2001                           |  | 2002    |         | 2001
|                                                       |                         |   |                              |        |                                |  |         |         |     
|Sales                                                  |                         | $ | 57,093                       |        |                                |  | 60,781  |         |      |  | 29,260 |        |  |  | 28,982  |        
|Cost of sales                                          |                         |   | 28,534                       |        |                                |  | 43,575  |         |      |  | 14,155 |        |  |  | 27,697  |        
|                                                       |                         |   |                              |        |                                |  |         |         |      |  |        |        |  |  |         |        
|                                                       | Gross profit            |   |                              | 28,559 |                                |  |         | 17,206  |      |  |        | 15,105 |  |  |         | 1,285   |  
|                                                       |                         |   |                              |        |                               
|Selling, general and administrative expense            |                         |   | 16,766                       |        |                                |  | 18,684  |         |      |  | 8,532  |        |  |  | 9,769   |        
|Research and development expense                       |                         |   | 9,421                        |        |                                |  | 8,776   |         |      |  | 4,735  |        |  |  | 4,502   |        
|Severance and other exit costs                         |                         |   | 598                          |        |                                |  | 322     |         |      |  | 234    |        |  |  | 137     |        
|Impairment of intangible assets                        |                         |   |                             |        |                                |  | 2,682   |         |      |  |       |        |  |  | 2,682   |        
|Amortization of intangible assets                      |                         |   | 1,036                        |        |                                |  | 3,853   |         |      |  | 452    |        |  |  | 1,925   |        
|                                                       |                         |   |                              |        |                                |  |         |         |      |  |        |        |  |  |         |        
|                                                       | Operating income (loss) |   |                              | 738    |                                |  |         | (17,111 | )    |  |        | 1,152  |  |  |         | (17,730 | )
|                                                       |                         |   |                              |        |                                |  |         |         |      |  |        |        |  |  |         |        
|Interest and other income (expense), net               |                         |   | 225                          |        |                                |  | 277     |         |      |  | 100    |        |  |  | (159    | )      
|Foreign exchange gains (losses)                        |                         |   | (27                          | )      |                                |  | 25      |         |      |  | (5     | )      |  |  | (24     | )      
|                                                       |                         |   |                              |        |                                |  |         |         |      |  |        |        |  |  |         |        
|                                                       |                         |   | 198                          |        |                                |  | 302     |         |      |  | 95     |        |  |  | (183    | )      
|                                                       |                         |   |                              |        |                                |  |         |         |      |  |        |        |  |  |         |        
|Income (loss) before income taxes                      |                         |   | 936                          |        |                                |  | (16,809 | )       |      |  | 1,247  |        |  |  | (17,913 | )      
|Income tax expense (benefit)                           |                         |   | 253                          |        |                                |  | (6,072  | )       |      |  | 381    |        |  |  | (6,528  | )      
|                                                       |                         |   |                              |        |                                |  |         |         |      |  |        |        |  |  |         |        
|Net income (loss)                                      |                         | $ | 683                          |        |                                |  | (10,737 | )       |      |  | 866    |        |  |  | (11,385 | )      
|                                                       |                         |   |                              |        |                                |  |         |         |      |  |        |        |  |  |         |        
|Net income (loss) per common share                     |                         | $ | 0.05                         |        |                                |  | (0.74   | )       |      |  | 0.06   |        |  |  | (0.78   | )      
|                                                       |                         |   |                              |        |                                |  |         |         |      |  |        |        |  |  |         |        
|Net income (loss) per common share -
assuming dilution |                         | $ | 0.05                         |        |                                |  | (0.74   | )       |      |  | 0.06   |        |  |  | (0.78   | )      
|                                                       |                         |   |                              |        |                                |  |         |         |      |  |        |        |  |  |         |        

See accompanying notes to condensed consolidated financial statements

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SBS Technologies, Inc. and Subsidiaries
Consolidated Statement of Changes in Stockholders Equity
Thousands (except share amounts)
(Unaudited)

|                               |                                          |  |            |   |          |   |               |   |             |  |          |   |        |  |        |       |  |  |        |   |  |  |         |       | 
|------------------------------ | ---------------------------------------- |  | ---------- | - | -------- | - | ------------- | - | ----------- |  | -------- | - | ------ |  | ------ | ----- |  |  | ------ | - |  |  | ------- | ----- | 
|                               |                                          |  | Common     |   |          |   |               |   | Accumulated |  |          |   |        |  | Total 
|                               |                                          |  | stock      |   | Unearned |   | other         |   |             |  |          |   | stock-
|                               |                                          |  |            |   | Compen-  |   | comprehensive |   | Retained    |  | holders'
|                               |                                          |  | Shares     |   | Amount   |   | sation        |   | loss        |  | earnings |   | equity
|                               |                                          |  |            |   |          |   |               |   |             |  |          |   |       
|Balance
at June 30, 2002       |                                          |  | 14,628,709 |   |          | $ | 86,338        |   |             |  |         |   |        |  | (3,113 | )     |  |  | 30,421 |   |  |  | 113,646 |      
|                               |                                          |  |            |   |          |   |               |   |             |  |          |   |        |  |        |       |  |  |        |   |  |  |         |       | 
|Exercise of stock options      |                                          |  | 5,560      |   |          |   | 13            |   |             |  |         |   |        |  |       |       |  |  |       |   |  |  | 13      |      
|Restricted stock awards issued |                                          |  | 14,039     |   |          |   | 299           |   |             |  | (97      | ) |        |  |       |       |  |  |       |   |  |  | 202     |      
|                               | to directors                             |  |            |   |          |   |               |   |             |  |          |   |        |  |        |       |  |  |        |   |  |  |         |       | 
|Stock-based compensation       |                                          |  |           |   |          |   |              |   |             |  | 16       |   |        |  |       |       |  |  |       |   |  |  | 16      |      
|Stock repurchased and retired  |                                          |  | (46,000    | ) |          |   | (321          | ) |             |  |         |   |        |  |       |       |  |  |       |   |  |  | (321    | )    
|Net income                     |                                          |  |           |   |          |   |              |   |             |  |         |   |        |  |       |       |  |  | 683    |   |  |  | 683     |      
|Other comprehensive income:    |                                          |  |            |   |          |   |               |   |             |  |          |   |        |  |        |       |  |  |        |   |  |  |         |      
|                               | Foreign currency translation
adjustments |  |            |  |          |   |               |  |             |  |          |  |        |  |        | 1,193 |  |  |        |  |  |  |         | 1,193 | 
|                               |                                          |  |            |   |          |   |               |   |             |  |          |   |        |  |        |       |  |  |        |   |  |  |         |      
|Balance
at December 31, 2002   |                                          |  | 14,602,308 |   |          | $ | 86,329        |   |             |  | (81      | ) |        |  | (1,920 | )     |  |  | 31,104 |   |  |  | 115,432 |      
|                               |                                          |  |            |   |          |   |               |   |             |  |          |   |        |  |        |       |  |  |        |   |  |  |         |      

See accompanying notes to condensed consolidated financial statements

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SBS Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Thousands
(Unaudited)

|                                                  |                                                                                          |                                                         |                                    |                                           |       |                  |        |         |        |        |        |  
|------------------------------------------------- | ---------------------------------------------------------------------------------------- | ------------------------------------------------------- | ---------------------------------- | ----------------------------------------- | ----- | ---------------- | ------ | ------- | ------ | ------ | ------ | -
|                                                  |                                                                                          |                                                         |                                    |                                           |       | Six months ended
|                                                  |                                                                                          |                                                         |                                    |                                           |       | December 31,    
|                                                  |                                                                                          |                                                         |                                    |                                           |       |                 
|                                                  |                                                                                          |                                                         |                                    |                                           |       | 2002             |        | 2001   
|                                                  |                                                                                          |                                                         |                                    |                                           |       |                  |        |        
|Cash flows from operating activities:             |                                                                                          |                                                         |                                    |                                           |       |                  |        |        
|                                                  | Net income (loss)                                                                        |                                                         | $                                  | 683                                       |       |                  |        | (10,737 | )     
|                                                  |                                                                                          |                                                         |                                    |                                           |       |                  |        |        
|                                                  | Adjustments to reconcile net income (loss) to net cash provided by
operating activities: |                                                         |                                    |                                           |       |                  |        |         |       
|                                                  |                                                                                          | Depreciation                                            |                                    |                                           | 1,996 |                  |        |         | 1,776  |       
|                                                  |                                                                                          | Amortization of intangible assets                       |                                    |                                           | 1,036 |                  |        |         | 3,853  |       
|                                                  |                                                                                          | Impairment of intangible assets                         |                                    |                                           |      |                  |        |         | 2,682  |       
|                                                  |                                                                                          | Bad debt expense                                        |                                    |                                           | 268   |                  |        |         | 297    |       
|                                                  |                                                                                          | Deferred income taxes                                   |                                    |                                           | 2,861 |                  |        |         | (6,562 | )     
|                                                  |                                                                                          | Income tax benefit of stock options exercised           |                                    |                                           |      |                  |        |         | 83     |       
|                                                  |                                                                                          | Loss on disposition of assets                           |                                    |                                           | 5     |                  |        |         | 7      |       
|                                                  |                                                                                          | Foreign exchange (gains) losses                         |                                    |                                           | 27    |                  |        |         | (25    | )     
|                                                  |                                                                                          | Stock-based compensation                                |                                    |                                           | 16    |                  |        |         | 56     |       
|                                                  |                                                                                          | Stock issued to directors under restricted stock awards |                                    |                                           | 202   |                  |        |         |       |       
|                                                  |                                                                                          | Changes in assets and liabilities:                      |                                    |                                           |       |                  |        |         |        |       
|                                                  |                                                                                          |                                                         | Receivables                        |                                           |       | (1,557           | )      |         |        | 7,330  |       
|                                                  |                                                                                          |                                                         | Inventories                        |                                           |       | (616             | )      |         |        | 18,057 |       
|                                                  |                                                                                          |                                                         | Income tax receivable              |                                           |       | (2,750           | )      |         |        | 2,260  |       
|                                                  |                                                                                          |                                                         | Prepaids and other assets          |                                           |       | (700             | )      |         |        | 1,188  |       
|                                                  |                                                                                          |                                                         | Accounts payable                   |                                           |       | (282             | )      |         |        | (420   | )     
|                                                  |                                                                                          |                                                         | Accrued representative commissions |                                           |       | 442              |        |         |        | (239   | )     
|                                                  |                                                                                          |                                                         | Accrued compensation               |                                           |       | (554             | )      |         |        | (440   | )     
|                                                  |                                                                                          |                                                         | Other current liabilities          |                                           |       | 253              |        |         |        | 1,200  |       
|                                                  |                                                                                          |                                                         |                                    |                                           |       |                  |        |        
|                                                  |                                                                                          |                                                         |                                    | Net cash provided by operating activities |       |                  | 1,330  |         |        |        | 20,366 |  
|                                                  |                                                                                          |                                                         |                                    |                                           |       |                  |        |        
|Cash flows from investing activities:             |                                                                                          |                                                         |                                    |                                           |       |                  |        |        
|                                                  | Acquisition of property and equipment                                                    |                                                         |                                    | (666                                      | )     |                  |        | (2,231  | )     
|                                                  | Purchase of license agreement                                                            |                                                         |                                    | (200                                      | )     |                  |        |        |       
|                                                  |                                                                                          |                                                         |                                    |                                           |       |                  |        |        
|                                                  |                                                                                          |                                                         |                                    | Net cash used by investing activities     |       |                  | (866   | )       |        |        | (2,231 | )
|                                                  |                                                                                          |                                                         |                                    |                                           |       |                  |        |        
|Cash flows from financing activities:             |                                                                                          |                                                         |                                    |                                           |       |                  |        |        
|                                                  | Payments on notes payable                                                                |                                                         |                                    |                                          |       |                  |        | (2,500  | )     
|                                                  | Repurchase and retirement of common stock                                                |                                                         |                                    | (321                                      | )     |                  |        | (488    | )     
|                                                  | Proceeds from exercise of stock options and warrants                                     |                                                         |                                    | 13                                        |       |                  |        | 828     |       
|                                                  |                                                                                          |                                                         |                                    |                                           |       |                  |        |        
|                                                  |                                                                                          |                                                         |                                    | Net cash used by financing activities     |       |                  | (308   | )       |        |        | (2,160 | )
|                                                  |                                                                                          |                                                         |                                    |                                           |       |                  |        |        
|Effect of exchange rate changes on cash           |                                                                                          |                                                         | 188                                |                                           |       |                  | 36     |        
|                                                  |                                                                                          |                                                         |                                    |                                           |       |                  |        |        
|Net change in cash and cash equivalents           |                                                                                          |                                                         | 344                                |                                           |       |                  | 16,011 |        
|Cash and cash equivalents at beginning of period  |                                                                                          |                                                         | 24,811                             |                                           |       |                  | 9,734  |        
|                                                  |                                                                                          |                                                         |                                    |                                           |       |                  |        |        
|Cash and cash equivalents at end of period        |                                                                                          | $                                                       | 25,155                             |                                           |       |                  | 25,745 |        
|                                                  |                                                                                          |                                                         |                                    |                                           |       |                  |        |        
|Supplemental disclosure of cash flow information: |                                                                                          |                                                         |                                    |                                           |       |                  |        |        
|                                                  | Interest paid                                                                            |                                                         | $                                  | 12                                        |       |                  |        | 15      |       
|                                                  |                                                                                          |                                                         |                                    |                                           |       |                  |        |        
|                                                  | Income taxes paid (received)                                                             |                                                         | $                                  | 252                                       |       |                  |        | (1,868  | )     
|                                                  |                                                                                          |                                                         |                                    |                                           |       |                  |        |        

See accompanying notes to condensed consolidated financial statements

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##### Table of Contents






SBS Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements  Unaudited
December 31, 2002



| | 1) |  | Summary of Significant Accounting Policies
| | -- |  | ------------------------------------------



| |    |  | The accounting policies as set forth in SBS Technologies, Inc.s (SBS)
Annual Report on Form 10-K for the year ended June 30, 2002 have been
adhered to in preparing the accompanying interim condensed consolidated
financial statements except as amended for the following discussion on
accounting for goodwill. These statements are unaudited but include all
adjustments, consisting of normal recurring adjustments that SBS considers
necessary for a fair presentation of the financial position, results of
operations, and cash flows for such interim periods. Results for such
interim periods are not necessarily indicative of results for a full year.                                                                                                                                                                                                                                                                                                                                                   
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |    |  | The Company adopted Statement of Financial Accounting Standards No. 142,
Goodwill and Other Intangible Assets(SFAS 142) on July 1, 2002. SFAS 142
eliminates the amortization of goodwill and other intangible assets that
have indefinite useful lives. Amortization will continue to be recorded
for intangible assets with definite useful lives. SFAS 142 also requires at
least an annual impairment review of goodwill and other intangible assets.
Any asset deemed to be impaired is to be written down to its fair value.
SBS completed step 1 of the required transitional goodwill impairment
analysis in accordance with SFAS 142 prior to December 31, 2002 and an
indicator of potential impairment was determined for certain reporting
units in both the Commercial and Government Group and the Communications
and Enterprise Group. SBS is in the process of completing step 2 of the
required analysis to determine the amount, if any, of transitional
impairment to be recorded prior to June 30, 2003.
|
| | 2) |  | Receivables, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |    |  | Receivables, net consist of the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

|                                     |  |              |        |          |  |  |        |  
|------------------------------------ |  | ------------ | ------ | -------- |  |  | ------ | -
|                                     |  | December 31, |        | June 30,
|Thousands                            |  | 2002         |        | 2002    
|                                     |  |              |        |         
|Accounts receivable                  |  |              | 25,377 |          |  |  | 23,992 |  
|Less allowance for doubtful accounts |  |              | (1,206 | )        |  |  | (1,373 | )
|                                     |  |              |        |          |  |  |       
|                                     |  |              | 24,171 |          |  |  | 22,619 |  
|                                     |  |              |        |          |  |  |       



| | 3) | Inventories                           | 
| | -- | ------------------------------------- | 
|
| |    | Inventories consist of the following:

|                |  |              |        |          |  |  |        | 
|--------------- |  | ------------ | ------ | -------- |  |  | ------ | 
|                |  | December 31, |        | June 30,
|Thousands       |  | 2002         |        | 2002    
|                |  |              |        |         
|Raw materials   |  |              | 10,288 |          |  |  | 9,663  | 
|Work in process |  |              | 5,635  |          |  |  | 5,328  | 
|Finished goods  |  |              | 3,333  |          |  |  | 3,437  | 
|                |  |              |        |          |  |  |       
|                |  |              | 19,256 |          |  |  | 18,428 | 
|                |  |              |        |          |  |  |       



| |  |  | For the six and three month periods ended December 31, 2002, approximately
$550,000 and $175,000 of inventory previously written down to zero had been
sold.
| |  |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------

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SBS Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements  Unaudited
December 31, 2002
(Continued)



| | 4) | Goodwill and Intangible Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|
| |    | Effective July 1, 2002, SBS adopted SFAS 142, Goodwill and Other
Intangible Assets, and no longer amortizes goodwill. As of the date of
adoption, SBS had unamortized goodwill of approximately
$20.5 million subject to the transition provisions of SFAS 142, which
included $434,000 for the net book value of acquired assembled workforce
intangibles, as these assets did not meet the criteria for recognition
apart from goodwill. There was no goodwill amortization expense for the
six-month and three-month periods ended December 31, 2002, whereas goodwill
amortization amounted to approximately $2.4 million and $1.2 million for
the six and three month periods ended December 31, 2001.
|
| |    | The following table presents the impact of the adoption of SFAS 142 on
reported net income (loss) and net income (loss) per applicable common
share had SFAS 142 been in effect in fiscal 2001:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|                                                 |                        |                 |     |                  |   |                    |         |       |       |      |     |      |   |  |         |       |     | 
|------------------------------------------------ | ---------------------- | --------------- | --- | ---------------- | - | ------------------ | ------- | ----- | ----- | ---- | --- | ---- | - |  | ------- | ----- | --- | 
|                                                 |                        |                 |     | Six months ended |   | Three months ended
|Thousands - except per share amounts             |                        | December 31,    |     | December 31,    
|                                                 |                        |                 |     |                 
|                                                 |                        |                 |     | 2002             |   | 2001               |         | 2002  |       | 2001
|                                                 |                        |                 |     |                  |   |                    |         |       |       |     
|Reported net income (loss)                       |                        | $               | 683 |                  |   |                    | (10,737 | )     |       |      | 866 |      |   |  | (11,385 | )    
|                                                 |                        |                 |     |                  |   |                    |         |       |       |      |     |      |   |  |         |      
|Adjustments:                                     |                        |                 |     |                  |   |                    |         |       |       |      |     |      |   |  |         |      
|                                                 | Goodwill amortization  |                 |     |                 |   |                    |         | 2,331 |       |      |     |     |   |  |         | 1,166 |    
|                                                 | Workforce amortization |                 |     |                 |   |                    |         | 38    |       |      |     |     |   |  |         | 19    |    
|                                                 | Income tax affect      |                 |     |                 |   |                    |         | (856  | )     |      |     |     |   |  |         | (432  | )  
|                                                 |                        |                 |     |                  |   |                    |         |       |       |      |     |      |   |  |         |      
|                                                 |                        | Net adjustments |     |                  |  |                    |         |       | 1,513 |      |     |      |  |  |         |       | 753 | 
|                                                 |                        |                 |     |                  |   |                    |         |       |       |      |     |      |   |  |         |      
|Adjusted net income (loss)                       |                        | $               | 683 |                  |   |                    | (9,224  | )     |       |      | 866 |      |   |  | (10,632 | )    
|                                                 |                        |                 |     |                  |   |                    |         |       |       |      |     |      |   |  |         |      
|Net income (loss) per share:                     |                        |                 |     |                  |   |                    |         |       |       |      |     |      |   |  |         |      
|                                                 | Reported               |                 | $   | 0.05             |   |                    |         | (0.74 | )     |      |     | 0.06 |   |  |         | (0.78 | )  
|                                                 | Adjusted               |                 | $   | 0.05             |   |                    |         | (0.64 | )     |      |     | 0.06 |   |  |         | (0.73 | )  
|Net income (loss) per share
 assuming dilution: |                        |                 |     |                  |   |                    |         |       |       |      |     |      |   |  |         |      
|                                                 | Reported               |                 | $   | 0.05             |   |                    |         | (0.74 | )     |      |     | 0.06 |   |  |         | (0.78 | )  
|                                                 | Adjusted               |                 | $   | 0.05             |   |                    |         | (0.64 | )     |      |     | 0.06 |   |  |         | (0.73 | )  

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SBS Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements  Unaudited
December 31, 2002
(Continued)



| |  | The following table discloses information regarding the carrying amounts
and associated accumulated amortization for intangible assets subject to
amortization after the adoption of SFAS 142. | 
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

Amortized Intangible Assets

|                          |        |       |              |                         |        |             |  |              |       |       |  |   |       | 
|------------------------- | ------ | ----- | ------------ | ----------------------- | ------ | ----------- |  | ------------ | ----- | ----- |  | - | ----- | 
|                          |        |       |              | As of December 31, 2002
|                         
|                          |        |       |              | Gross carrying          |        | Accumulated |  | Net carrying
|Thousands                 | amount |       | amortization |                         | amount
|                          |        |       |              |                         |        |            
|Core-developed technology | $      | 8,753 |              |                         | $      | 5,201       |  |              | $     | 3,552 | 
|License agreements        |        | 2,436 |              |                         |        | 1,191       |  |              |       | 1,245 | 
|Covenant not-to-compete   |        | 1,623 |              |                         |        | 1,171       |  |              |       | 452   | 
|Other intangibles         |        | 300   |              |                         |        | 102         |  |              |       | 198   | 
|                          |        |       |              |                         |        |             |  |              |       |       |  |  
|Total                     |        |       |              | $                       | 13,112 |             |  | $            | 7,665 |       |  | $ | 5,447 | 
|                          |        |       |              |                         |        |             |  |              |       |       |  |  

|                          |        |       |              |                     |        |             |  |              |       |       |  |   |       | 
|------------------------- | ------ | ----- | ------------ | ------------------- | ------ | ----------- |  | ------------ | ----- | ----- |  | - | ----- | 
|                          |        |       |              | As of June 30, 2002
|                         
|                          |        |       |              | Gross carrying      |        | Accumulated |  | Net carrying
|Thousands                 | amount |       | amortization |                     | amount
|                          |        |       |              |                     |        |            
|Core-developed technology | $      | 8,753 |              |                     | $      | 4,723       |  |              | $     | 4,030 | 
|License agreements        |        | 2,236 |              |                     |        | 826         |  |              |       | 1,410 | 
|Covenant not-to-compete   |        | 1,623 |              |                     |        | 996         |  |              |       | 627   | 
|Other intangibles         |        | 300   |              |                     |        | 83          |  |              |       | 217   | 
|                          |        |       |              |                     |        |             |  |              |       |       |  |  
|Total                     |        |       |              | $                   | 12,912 |             |  | $            | 6,628 |       |  | $ | 6,284 | 
|                          |        |       |              |                     |        |             |  |              |       |       |  |  



| |  | The following table summarizes the amortization expense attributable to
intangible assets for the six-month and three-month periods ended December 31, 2002 and 2001.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                |  |                                    |                   |           |   |       |    
|------------------------------- |  | ---------------------------------- | ----------------- | --------- | - | ----- | ---
|Aggregate amortization expense: |  |                                    |                   |          
|                                |  | For the six-month periods ended:   |                   | Thousands
|                                |  |                                    | December 31, 2002 |           | $ | 1,036 |    
|                                |  |                                    | December 31, 2001 |           | $ | 3,853 | (a)
|                                |  | For the three-month periods ended: |                   |           |   |      
|                                |  |                                    | December 31, 2002 |           | $ | 452   |    
|                                |  |                                    | December 31, 2001 |           | $ | 1,925 | (a)



| |    
| | ---
| | (a)

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SBS Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements  Unaudited
December 31, 2002
(Continued)



| |  | The following table summarizes estimated amortization expense for the
fiscal years ending in June 2003 through 2007. | 
| |  | -------------------------------------------------------------------------------------------------------------------- | 

|                                |               |  |           |  |   |       | 
|------------------------------- | ------------- |  | --------- |  | - | ----- | 
|Estimated amortization expense: |               |  | Thousands
|For the fiscal years ending:    |               |  |           | 
|                                | June 30, 2003 |  |           |  | $ | 1,940 | 
|                                | June 30, 2004 |  |           |  | $ | 1,673 | 
|                                | June 30, 2005 |  |           |  | $ | 1,271 | 
|                                | June 30, 2006 |  |           |  | $ | 847   | 
|                                | June 30, 2007 |  |           |  | $ | 719   | 



| |  | Changes in the carrying amount of goodwill for the six-month period ended
December 31, 2002 are as follows: | 
| |  | ----------------------------------------------------------------------------------------------------------- | 

Total Goodwill by Operating Segment

|                             |                                          |                  |                    |       |            |       |                |     |  |   |        |     | 
|---------------------------- | ---------------------------------------- | ---------------- | ------------------ | ----- | ---------- | ----- | -------------- | --- |  | - | ------ | --- | 
|                             |                                          |                  |                    |       |            |       | Commercial and |     |  |   |       
|                             |                                          |                  | Communications and |       | Government |       |                |     | 
|Thousands                    |                                          | Enterprise Group |                    | Group |            | Total
|                             |                                          |                  |                    |       |            |      
|Balance at June 30, 2002     |                                          | $                | 3,448              |       |            | $     | 17,020         |     |  | $ | 20,468 |    
|                             | Foreign currency
translation adjustments |                  |                    |      |            |       |                | 607 |  |   |        | 607 | 
|                             |                                          |                  |                    |       |            |       |                |     |  |   |        |    
|Balance at December 31, 2002 |                                          | $                | 3,448              |       |            | $     | 17,627         |     |  | $ | 21,075 |    
|                             |                                          |                  |                    |       |            |       |                |     |  |   |        |    



| | 5) | Earnings Per Share | 
| | -- | ------------------ | 



| |  | Net income (loss) per common share is based on weighted average shares
outstanding. Net income (loss) per common share  assuming dilution
includes the dilutive effects of potential common shares outstanding during
the period. | 
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

|                                                                                   |  |                  |        |                    |  |      |         |      |  |  |        |  |  |  |         |   | 
|---------------------------------------------------------------------------------- |  | ---------------- | ------ | ------------------ |  | ---- | ------- | ---- |  |  | ------ |  |  |  | ------- | - | 
|                                                                                   |  | Six months ended |        | Three months ended
|Thousands except per share amounts                                                 |  | December 31,     |        | December 31,      
|                                                                                   |  |                  |        |                   
|                                                                                   |  | 2002             |        | 2001               |  | 2002 |         | 2001
|                                                                                   |  |                  |        |                    |  |      |         |     
|Net Income (Loss) Per
Common Share                                                 |  |                  |        |                    |  |      |         |      |  |  |        |  |  |  |         |  
|Net income (loss)                                                                  |  | $                | 683    |                    |  |      | (10,737 | )    |  |  | 866    |  |  |  | (11,385 | )
|                                                                                   |  |                  |        |                    |  |      |         |      |  |  |        |  |  |  |         |  
|Weighted-average common
shares outstanding used
in earnings per share
computations |  |                  | 14,607 |                    |  |      | 14,526  |      |  |  | 14,598 |  |  |  | 14,523  |  
|                                                                                   |  |                  |        |                    |  |      |         |      |  |  |        |  |  |  |         |  
|Net income (loss) per
common share                                                 |  | $                | 0.05   |                    |  |      | (0.74   | )    |  |  | 0.06   |  |  |  | (0.78   | )
|                                                                                   |  |                  |        |                    |  |      |         |      |  |  |        |  |  |  |         |  

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SBS Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements  Unaudited
December 31, 2002
(Continued)

|                                                                                   |   |                  |        |                    |         |      |        |      |  |  |         |   |  |        |   |  | 
|---------------------------------------------------------------------------------- | - | ---------------- | ------ | ------------------ | ------- | ---- | ------ | ---- |  |  | ------- | - |  | ------ | - |  | 
|                                                                                   |   | Six months ended |        | Three months ended
|Thousands except per share amounts                                                 |   | December 31,     |        | December 31,      
|                                                                                   |   |                  |        |                   
|                                                                                   |   | 2002             |        | 2001               |         | 2002 |        | 2001
|                                                                                   |   |                  |        |                    |         |      |        |     
|Net Income (Loss) Per
Common Share 
Assuming Dilution                             |   |                  |        |                    |         |      |        |      |  |  |         |   |  |       
|Net income (loss)                                                                  | $ | 683              |        |                    | (10,737 | )    |        | 866  |  |  | (11,385 | )
|                                                                                   |   |                  |        |                    |         |      |        |      |  |  |         |   |  |        |  
|Weighted-average common
shares outstanding used
in earnings per share
computations |   |                  | 14,632 |                    |         |      | 14,526 |      |  |  | 14,627  |   |  | 14,523 |  
|                                                                                   |   |                  |        |                    |         |      |        |      |  |  |         |   |  |        |  
|Net income (loss) per
common share 
assuming dilution                             | $ |                  | 0.05   |                    |         |      | (0.74  | )    |  |  | 0.06    |   |  | (0.78  | )
|                                                                                   |   |                  |        |                    |         |      |        |      |  |  |         |   |  |        |  
|Shares Used in Net
Income (Loss) per Share
Computations                            |   |                  |        |                    |         |      |        |      |  |  |         |   |  |        |  
|Average outstanding
common shares                                                  |   |                  | 14,607 |                    |         |      | 14,526 |      |  |  | 14,598  |   |  | 14,523 |  
|Incremental shares from
assumed conversions 
potential common shares              |   |                  | 25     |                    |         |      |       |      |  |  | 29      |   |  |       |  
|                                                                                   |   |                  |        |                    |         |      |        |      |  |  |         |   |  |        |  
|Shares used in net
income (loss) per
common share 
assuming dilution
computations |   |                  | 14,632 |                    |         |      | 14,526 |      |  |  | 14,627  |   |  | 14,523 |  
|                                                                                   |   |                  |        |                    |         |      |        |      |  |  |         |   |  |        |  



| |    | Due to the reported net loss for the six and three months ended December
31, 2001, 301,783 and 274,989 potential common shares, respectively, were
not included in the computation of net loss per common share  assuming
dilution because the effect would be anti-dilutive. For the six and three
months ended December 31, 2002, options to purchase 3,267,443 and 3,121,129
shares of common stock, respectively, and for the six and three months
ended December 31, 2001, options to purchase 1,975,524 and 2,069,494 shares
of common stock, respectively, were outstanding but were not included in
the computation of net income (loss) per common share  assuming dilution
because the options exercise prices were greater than the average market
price of the common shares. | 
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|
| | 6) | Comprehensive Income (Loss)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 
|
| |    | Comprehensive income for the six and three months ended December 31, 2002
was $1.9 million and
$2.3 million respectively. Comprehensive loss for the six and three months
ended December 31, 2001 was $(10.0) million and $(8.2) million,
respectively. The difference between comprehensive income (loss) and net
income (loss) was related to foreign currency translation adjustments.                                                                                                                                                                                                                                                                                                                                                                                                    | 

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SBS Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements  Unaudited
December 31, 2002
(Continued)



| | 7) | Segment Financial Data                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|
| |    | SBS operates worldwide through two operating segments: the Communications
and Enterprise Group and the Commercial and Government Group. The
Communications and Enterprise Group consists of SBS Technologies, Inc.,
Communications and Enterprise Group (formerly SBS Technologies, Inc.,
Communications Products into which SDL Communications, Inc. and SBS
Technologies, Inc., Industrial Computers were merged in September 2002).
The Commercial and Government Group consists of SBS Technologies, Inc.,
Commercial Group, SBS Technologies, Inc., Government Group (formerly SBS
Technologies, Inc., Embedded Computers and SBS avionics and telemetry
division, the assets of which were conveyed to SBS Technologies, Inc.,
Government Group from SBS Technologies, Inc. in July 2002), SBS
Technologies GmbH & Co. KG and ortec Electronic Assembly GmbH. These
segments are based on the markets that are served and the products that are
provided to those markets. Each segment has its own sales and distribution
channels and has a manager who reports directly to the President and Chief
Operating Officer. Reportable segments for all periods presented have been
reclassified to conform to the current segment reporting structure. | 
|
| |    | SBS measures its segments results of operations based on income (loss)
before income taxes and prior to allocation of corporate overhead expenses
other than marketing costs, the majority of amortization associated with
acquisitions and substantially all interest income and expense. The
accounting policies used to measure segment results of operations are the
same as those referred to in Note 1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | 

|                                            |      |                  |                  |                  |              |                 |             |       |  |  |        |         |   |  |        |         |  
|------------------------------------------- | ---- | ---------------- | ---------------- | ---------------- | ------------ | --------------- | ----------- | ----- |  |  | ------ | ------- | - |  | ------ | ------- | -
|                                            |      |                  | Communications & |                  | Commercial & |                 | Corporate & |       |  |  |       
|Thousands                                   |      | Enterprise Group |                  | Government Group |              | Unallocated (1) |             | Total
|                                            |      |                  |                  |                  |              |                 |             |      
|Six-month
periods ended December 31         |      |                  |                  |                  |              |                 |             |       |  |  |        |         |   |  |        |        
|                                            |      |                  |                  |                  |              |                 |             |       |  |  |        |         |   |  |        |        
|Gross Sales                                 | 2002 |                  | 12,337           |                  |              |                 | 44,831      |       |  |  |       |         |   |  | 57,168 |        
|Inter-segment sales                         |      |                  | (19              | )                |              |                 | (56         | )     |  |  |       |         |   |  | (75    | )      
|                                            |      |                  |                  |                  |              |                 |             |       |  |  |        |         |   |  |        |        
|Sales to external customers                 |      |                  | 12,318           |                  |              |                 | 44,775      |       |  |  |       |         |   |  | 57,093 |        
|                                            |      |                  |                  |                  |              |                 |             |       |  |  |        |         |   |  |        |        
|Gross Sales                                 | 2001 |                  | 19,755           |                  |              |                 | 42,975      |       |  |  |       |         |   |  | 62,730 |        
|Inter-segment sales                         |      |                  | (211             | )                |              |                 | (1,738      | )     |  |  |       |         |   |  | (1,949 | )      
|                                            |      |                  |                  |                  |              |                 |             |       |  |  |        |         |   |  |        |        
|Sales to external customers                 |      |                  | 19,544           |                  |              |                 | 41,237      |       |  |  |       |         |   |  | 60,781 |        
|                                            |      |                  |                  |                  |              |                 |             |       |  |  |        |         |   |  |        |        
|Segment profit (income
(loss) before taxes) | 2002 |                  | (2,724           | )                |              |                 | 9,919       |       |  |  | (6,259 | )       |   |  | 936    |        
|                                            |      | 2001             |                  | (8,692           | )            |                 |             | 4,545 |  |  |        | (12,662 | ) |  |        | (16,809 | )

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SBS Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements  Unaudited
December 31, 2002
(Continued)

|                                            |      |                  |                  |                  |              |                 |             |       |  |  |        |   |  |  |         |   | 
|------------------------------------------- | ---- | ---------------- | ---------------- | ---------------- | ------------ | --------------- | ----------- | ----- |  |  | ------ | - |  |  | ------- | - | 
|                                            |      |                  | Communications & |                  | Commercial & |                 | Corporate & |       |  |  |       
|Thousands                                   |      | Enterprise Group |                  | Government Group |              | Unallocated (1) |             | Total
|                                            |      |                  |                  |                  |              |                 |             |      
|Three-month periods ended December 31       |      |                  |                  |                  |              |                 |             |       |  |  |        |   |  |  |         |  
|Gross
Sales                                 | 2002 |                  | 5,423            |                  |              |                 | 23,883      |       |  |  |       |   |  |  | 29,306  |  
|Inter-segment sales                         |      |                  | (19              | )                |              |                 | (27         | )     |  |  |       |   |  |  | (46     | )
|                                            |      |                  |                  |                  |              |                 |             |       |  |  |        |   |  |  |         |  
|Sales to external customers                 |      |                  | 5,404            |                  |              |                 | 23,856      |       |  |  |       |   |  |  | 29,260  |  
|                                            |      |                  |                  |                  |              |                 |             |      
|Gross
Sales                                 | 2001 |                  | 9,169            |                  |              |                 | 20,923      |       |  |  |       |   |  |  | 30,092  |  
|Inter-segment sales                         |      |                  | (47              | )                |              |                 | (1,063      | )     |  |  |       |   |  |  | (1,110  | )
|                                            |      |                  |                  |                  |              |                 |             |       |  |  |        |   |  |  |         |  
|Sales to external customers                 |      |                  | 9,122            |                  |              |                 | 19,860      |       |  |  |       |   |  |  | 28,982  |  
|                                            |      |                  |                  |                  |              |                 |             |      
|Segment profit (income (loss) before taxes) | 2002 |                  | (1,044           | )                |              |                 | 5,420       |       |  |  | (3,129 | ) |  |  | 1,247   |  
|                                            | 2001 |                  | (9,526           | )                |              |                 | (414        | )     |  |  | (7,973 | ) |  |  | (17,913 | )
|                                            |      |                  |                  |                  |              |                 |             |      
|As of December 31,                          |      |                  |                  |                  |              |                 |             |       |  |  |        |   |  |  |         |  
|Total Assets                                | 2002 |                  | 13,654           |                  |              |                 | 40,687      |       |  |  | 73,085 |   |  |  | 127,426 |  
|                                            | 2001 |                  | 20,331           |                  |              |                 | 32,114      |       |  |  | 82,458 |   |  |  | 134,903 |  



| |    
| | ---
| | (1)



| | 8) | Severance and Other Exit Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
|
| |    | For the six and three months ended December 31, 2002, SBS recorded employee
severance and other exit costs of $598,000 and $234,000, respectively. Due
to the continued depressed economic and market conditions facing its
Communications and Enterprise Group, on July 22, 2002, SBS notified 19 full
and part-time employees at its Madison, Wisconsin engineering design center
that their jobs had been eliminated. Additionally, for the same reason, on
September 30, 2002, SBS notified 22 employees of the Communications and
Enterprise Group that their jobs were being eliminated. Also, during the
six months ended December 31, 2002, severance costs were incurred for 12
other employees who were notified that their jobs had been eliminated. In
addition, during the three months ended December 31, 2002, SBS paid lease
termination fees of approximately $186,000 in connection with the closure
of certain locations. As of December 31, 2002, all of the severance and
other exit costs had been paid. | 

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##### Table of Contents



SBS Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements  Unaudited
December 31, 2002
(Continued)



| |  | During the year ended June 30, 2002, based on unfavorable economic and
market conditions, facility consolidation actions, and the decision to exit
the legacy PCI Chassis product line, SBS reduced its employee base,
resulting in elimination of 159 positions in manufacturing, research and
development, administration, and sales and marketing. As a result, for the
year ended June 30, 2002, employee severance and other termination charges
of approximately $1,253,000 were recorded. As of December 31, 2002, cash payments of $1,219,000 had been made and $34,000 of
the original charge was reversed as a result of the decision not to
terminate certain originally notified employees. | 
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 

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##### Table of Contents






SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of
Financial Condition and Results of Operations
December 31, 2002

The following discussion and analysis should be read in conjunction with SBS
Financial Statements and Notes thereto. Information discussed herein, other
than statements of historical fact, that addresses future financial
performance, activities, events or developments that SBS or management intends,
expects, projects, believes or anticipates will or may occur in the future are
forward-looking statements. These forward-looking statements include expected
sales for the remainder of fiscal 2003, sales and gross margin for the quarter
ending March 31, 2003, expectations of internally-generated cash flows, and
expectations for government spending. These statements are based upon certain
assumptions and assessments made by management of SBS in light of its
experience and its perception of historical trends, current conditions,
expected future developments and other factors it believes to be appropriate.
These assumptions and assessments include the volume and product mix of sales,
estimates of costs and inventory and receivable levels based on preliminary
information, and other items. The forward-looking statements included in this
Form 10-Q are also subject to a number of risks, uncertainties, and other
factors which could cause the actual results to differ materially from those
contained in the forward-looking statements. These include but are not limited
to economic, competitive, supply and demand, governmental, and technological
factors affecting SBS operations, markets, products, services, and prices, a
high degree of uncertainty and rapid change in the markets addressed by SBS
products, customer demand for SBS products, and other risk factors listed in
the Companys Form 10-K for the year ended June 30, 2002. These
forward-looking statements are not guarantees of future performance, and actual
results, developments, and business decisions may differ materially from those
expressed or implied by these forward-looking statements.

Overview

SBS designs and builds open-architecture embedded computer products that enable
original equipment manufacturers (OEM) to serve the commercial, communication,
enterprise and government markets. SBS products are integrated into a variety
of applications including communication networking, medical imaging, industrial
automation, and military systems. The portfolio includes an extensive line of
CPU boards, computer interconnections, avionics, telemetry, and fully
integrated systems and enclosures. SBS objective is to continue to capitalize
on its design expertise and customer service capabilities to enhance product
quality and reduce time to market for OEM customers. SBS has grown, and intends
to continue to grow, through a combination of internal growth and acquisitions.
SBS completed ten acquisitions between 1992 and June 30, 2002 that broadened
SBS product offerings and customer base. SBS achieves internal growth by
expanding its existing product lines through new product development, through
increasing penetration of its existing customer base, and by adding new
customers.

Sales for the six-month period ended December 31, 2002 were $57.1 million, a
6.1% decrease from the
$60.8 million in sales for the six-month period ended December 31, 2001. Net
income for the six-month period ended December 31, 2002 was $683,000, or net
income per common share  assuming dilution of $0.05. This compares to a net
loss for the six-month period ended December 31, 2001 of $(10.7) million, or
net loss per common share  assuming dilution of $(0.74).

Sales for the three-month period ended December 31, 2002, were $29.3 million, a
1.0% increase from the $29.0 million in sales for the three-month period ended
December 31, 2001. Net income for the three-month period ended December 31,
2002 was $866,000, or net income per common share  assuming dilution of
$0.06. This compares to a net loss for the three-month period ended December
31, 2001 of $(11.4) million, or net loss per common share  assuming dilution
of $(0.78).

SBS continues to experience depressed market and economic conditions in the
communications, enterprise, and commercial markets, and management does not
expect significant improvement in sales into these markets for the remainder of
fiscal 2003. Management expects some growth in sales to government customers
for the remainder of fiscal 2003 due to increases in Department of Defense
development and field deployment expenditures.

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SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of
Financial Condition and Results of Operations
December 31, 2002
(Continued)

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Estimates are used when accounting for items such
as inventory valuation, allowances for doubtful accounts, goodwill, long-lived
and intangible assets, and income taxes. These estimates and assumptions are
evaluated on an on-going basis and may require adjustment. Actual results
could differ from the estimates under different assumptions or conditions. The
policies discussed below are considered by management to be critical to an
understanding of SBS consolidated financial statements because their
application places the most significant demands on managements judgment, with
financial reporting results relying on estimation about the effect of matters
that are inherently uncertain. Excluding the adoption of Statement of
Financial Accounting Standards No. 142 (SFAS 142), Goodwill and Other
Intangible Assets, on July 1, 2002, SBS did not make any changes to these
policies during the six month period ended December 31, 2002. For additional
accounting policies, see Note 1 to the condensed consolidated financial
statements, Summary of Significant Accounting Policies.



| |  | Revenue Recognition. Revenue is generally recognized when goods are
shipped to the customer, provided that SBS has received a valid
purchase order, the price is fixed, title has transferred, collection
of the associated receivable is reasonably assured, and there are no
remaining significant obligations. Where customer acceptance
provisions exist, revenue is recognized only when SBS is certain that
the products meet all of the specified criteria for customer
acceptance and all other revenue recognition criteria have been met.                                                                                                                                                          | 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
|
| |  | Inventory Valuation. SBS records inventory write-downs to net
realizable value, which result in increases to cost of sales, based on
estimates of obsolescence or unmarketable inventory, taking into
account historical usage, forecasted future demand, and general market
conditions. Write-downs may also be recorded based on SBS decisions
to discontinue the marketing of certain products or product lines.
If SBS forecasts are incorrect, market conditions deteriorate, or SBS
decides to exit other product lines, additional inventory write-downs
may be required. If market conditions or demand are better than
expected, SBS may sell inventories that have been previously written
down. | 
|
|
| |  | Allowances for Doubtful Accounts. SBS maintains allowances for
doubtful accounts receivable resulting from the failure of its
customers to make required payments. The estimate is based on the
aging of SBS accounts receivable, SBS historical write-off
experience, and the current and projected financial condition of
customers. If SBS misinterprets the financial condition of customers
or if the financial condition of customers deteriorates, additional
allowances for doubtful accounts, and consequently the provision for
doubtful accounts, may be required.                                                                                                                              | 
|
| |  | Goodwill. In June 2001, the Financial Accounting Standards Board
issued SFAS 142, Goodwill and Other Intangible Assets. According to
this statement, goodwill and intangible assets with indefinite                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 

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SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of
Financial Condition and Results of Operations
December 31, 2002
(Continued)



| |   | lives are no longer subject to amortization, but rather an annual assessment
of impairment by applying a fair-value-based test. In conjunction with the
implementation of SFAS 142 as of the beginning of fiscal 2003, SBS completed
the first step of the required transitional impairment analysis prior to
December 31, 2002 and an indicator of potential impairment was determined for
certain reporting units in both the Commercial and Government Group and the
Communications and Enterprise Group. SBS is in the process of completing the
second step of the analysis to determine the amount, if any, of transitional
impairment to be recorded prior to June 30, 2003. According to our
accounting policy under the new rules, SBS will perform a similar review
annually or earlier if indicators of potential impairment exist. The
impairment review process is based on a discounted future cash flow approach
that includes estimates of future market growth rates, sales and costs as
well as appropriate discount rates. Estimates of future cash flows require
significant judgment, and any change in these estimates could result in the
recognition of additional impairment charges which reduce operating income. | 
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|
| |  | Long-Lived and Intangible Assets. SBS evaluates the carrying value of
long-lived and intangible assets whenever certain events or changes in
circumstances indicate that the carrying amount may not be
recoverable. These events or circumstances include, but are not
limited to, a prolonged industry or economic downturn, a significant
decline in SBS market value, or significant reductions in projected
future cash flows. An asset would be considered to be impaired if
future undiscounted cash flows, without consideration of interest, are
insufficient to recover the carrying amount of the asset. Once deemed
impaired, a charge to expense is recognized to the extent that the
carrying amount of the asset exceeds fair value. Fair value is
generally determined by calculating the discounted future cash flows
using a discount rate based upon SBS weighted average cost of
capital. Estimates of future cash flows require significant
judgment, and any change in these estimates may result in additional
impairment charges which reduce operating income.                                                                                                                                                    | 
|
| |  | Income Taxes. SBS estimates of current and deferred income taxes
reflect SBS assessment of current and future taxes to be paid or
received on items reflected in the financial statements, giving
consideration to both timing and probability of realization.
Estimates of current income taxes include estimates for items such as
general business credits and benefits from foreign sales. The fiscal
2003 annual effective tax rate could differ from current estimates as
a result of, among other things, future changes in income tax laws,
review of SBS tax returns by taxing authorities, or permanent
book/tax differences resulting from the implementation of tax planning
strategies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 

Results of Operations(references to fiscal 2003 and fiscal 2002 relate to interim and annual periods of the fiscal years ending on June 30)

Six Months Ended December 31, 2002 Compared To Six Months Ended December 31, 2001

Sales.For the six-month period ended December 31, 2002, sales decreased
6.1%, or $3.7 million, from $60.8 million for the six-month period ended
December 31, 2001, to $57.1 million. Unit shipments
declined within the Communications and Enterprise Group, primarily due to the
continued depressed market and economic conditions and delays of shipment by several of
the Groups telecommunications infrastructure customers.
Unit shipments increased among all
product lines within the Commercial and Government Group, which includes sales
contributed by products acquired in the Essential Communications asset
acquisition completed on March 4, 2002, with the exception of avionics and
telemetry products, which were consistent with fiscal 2002.

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##### Table of Contents



SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of
Financial Condition and Results of Operations
December 31, 2002
(Continued)

SBS expects
consolidated sales for the quarter ending March 31, 2003 to be consistent with
the quarter ended December 31, 2002; however, actual results may vary.

Gross Profit.For the six-month period ended December 31, 2002, gross profit
increased 66.0%, or $11.4 million, from $17.2 million for the six-month period ended December 31,
2001, to $28.6 million. The increase in gross profit was primarily due to
significant inventory write-downs and other charges recorded in fiscal 2002
that were not present in fiscal 2003. In fiscal 2002, a $12.4 million
inventory write-down and $185,000 of expenditures associated with SBS
manufacturing consolidation and cost reduction efforts were recorded. The
write-down consisted of inventory associated with programs that were not
anticipated to come back to their previous forecasts, inventory associated with
SBS decision to exit its legacy PCI chassis product line, and inventory
associated with SBS products that will no longer be marketed. Additionally,
the implementation of a new inventory management methodology associated with
the consolidation of SBS manufacturing operations contributed to the inventory
write-down in fiscal 2002. The consolidation efforts and new inventory
methodology resulted in a reduction in required inventory levels. During the
six-month period ended December 31, 2002, SBS consumed approximately $550,000
of inventory that had been written down to zero cost during fiscal 2002,
increasing gross margin as a percentage of sales by 1.0%. Gross profit as a
percent of sales for the six-month period ended December 31, 2002 was 50.0%
compared to 49.0% (excluding the $12.6 million of charges noted above) for the
six-month period ended December 31, 2001. The improvement in gross margin
resulted primarily from a change in sales mix to higher margin products in the
six-month period ended December 31, 2002. Based on managements sales
projections for the third quarter of fiscal 2003, gross profit as a percentage
of sales is expected to be slightly less than the 50.0% experienced during the
six-months ended December 31, 2002, although actual results may vary.

Selling, General and Administrative Expense.For the six-month period ended
December 31, 2002, selling, general and administrative (SG&A) expense decreased
10.3%, or $1.9 million from $18.7 million for the six-month period ended
December 31, 2001, to $16.8 million. This decrease was primarily due to the
benefits realized from cost reduction efforts implemented throughout the
quarters ended June 30, 2002 and September 30, 2002. The decrease in costs, partially offset by the reduction
in sales, resulted in an overall decrease in SG&A expense as a percentage of
sales to 29.4% in the six month period ended December 31, 2002 from 30.7% in
the six-month period ended December 31, 2001.

Research and Development Expense.For the six-month period ended December 31,
2002, research and development (R&D) expense increased 7.3%, or $645,000 from
$8.8 million for the six-month period ended December 31, 2001, to $9.4 million.
This increase was primarily due to the addition of research and development
employees resulting from the acquisition of the assets of Essential
Communications completed on March 4, 2002. For the six-month period ended
December 31, 2002, R&D expense as a percentage of sales increased to 16.5% from
14.4% in the six-month period ended December 31, 2001, primarily due to the
decrease in sales volume combined with the increase in R&D costs.

Severance and Other Exit Costs.For the six-months ended December 31, 2002,
SBS recorded severance and other exit costs of $598,000, which included lease
termination costs of approximately $186,000 paid as a result of SBS decision
to exit certain locations. Due to the continued depressed economic and market
conditions facing its Communications and Enterprise Group, on July 22, 2002,
SBS notified 19 full and part-

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##### Table of Contents



SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of
Financial Condition and Results of Operations
December 31, 2002
(Continued)

time employees at its Madison, Wisconsin engineering design center that their
jobs had been eliminated. Additionally, for the same reason, on September 30,
2002, SBS notified 22 employees of the Communications and Enterprise Group that
their jobs were being eliminated. Also, during the six months ended December
31, 2002, severance costs were incurred for 12 other employees who were
notified that their jobs had been eliminated. As of December 31, 2002, there
were no severance and other exit costs remaining to be paid from the exit plans
discussed previously.

Impairment of Assets. There were no asset impairment charges recorded in the
six-month period ended December 31, 2002. For the six-month period ended
December 31, 2001, the $2.7 million asset impairment charge represented the
write-off of the remaining goodwill recorded in connection with the acquisition
of Industrial Computers (formerly Micro Alliance) in November 1997. The
write-off was due to SBS decision to exit the PCI chassis business in the
quarter ended December 31, 2001.

Amortization of Intangible Assets.For the six-month period ended December 31,
2002, amortization of intangible assets was $1.0 million, compared to $3.9
million for the six-month period ended December 31, 2001. Effective July 1,
2002, SBS adopted SFAS 142, Goodwill and Other Intangible Assets, and no
longer amortizes goodwill. As of the date of adoption, SBS had unamortized
goodwill of approximately $20.5 million, subject to the transition provisions
of SFAS 142. There was no goodwill amortization expense for the
six-month period ended December 31, 2002, whereas goodwill amortization
amounted to approximately $2.4 million for the same period of fiscal 2002.

Interest and Other Income (Expense), Net.For the six-month period ended
December 31, 2002, net interest and other income of $225,000 consisted
primarily of interest income associated with surplus cash. For the six-month
period ended December 31, 2001, net interest and other income of $277,000
consisted primarily of a recovery from insurance of $307,000, and interest
income associated with surplus cash, partially offset by a $323,000 charge
related to an other-than-temporary decline in SBS investment in a software
company.

Income Tax Expense (Benefit).For the six-month periods ended December 31,
2002 and 2001, income tax expense (benefit) represented effective rates of
27.0% and (36.1)%, respectively. The decrease in the effective income tax rate
was due to the impact of a change in the mix of pre-tax income from domestic
and foreign sources coupled with benefits realized from tax planning strategies
in excess of previous estimates. A tax benefit related to the net loss was
recorded in fiscal 2002 primarily due to SBS ability to realize the benefit
through a tax loss carryback to prior periods.

Earnings Per Share.For the six-month period ended December 31, 2002, net
income per common share was $0.05 compared to a net loss per share of $(0.74)
for the six-month period ended December 31, 2001. For the six-month period
ended December 31, 2002, net income per common share  assuming dilution was
$0.05 compared to a net loss per common share  assuming dilution of $(0.74)
for the six-month period ended December 31, 2001. Net loss per common share
and net loss per common share  assuming dilution for the six-month period
ended December 31, 2001 would have been approximately $(0.04) excluding the
$12.4 million inventory write-down, the $2.7 million asset impairment charge,
the $185,000 of expenditures associated with SBS manufacturing consolidation
and cost reduction efforts, and the $322,000 of restructuring charges, which
totaled $15.6 million ($10.1 million after tax).

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SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of
Financial Condition and Results of Operations
December 31, 2002
(Continued)

Review of Business Segments

SBS operates internationally through two operating segments: the Communications
and Enterprise Group and the Commercial and Government Group. The
Communications and Enterprise Group consists of SBS Technologies, Inc.,
Communications and Enterprise Group (formerly SBS Technologies, Inc.,
Communications Products into which SDL Communications, Inc. and SBS
Technologies, Inc., Industrial Computers were merged in September 2002). The
Commercial and Government Group consists of SBS Technologies, Inc., Commercial
Group, SBS Technologies, Inc., Government Group (formerly SBS Technologies,
Inc., Embedded Computers and SBS avionics and telemetry division, the assets
of which were conveyed to SBS Technologies, Inc., Government Group from SBS
Technologies, Inc. in July 2002), SBS Technologies GmbH & Co. KG and ortec
Electronic Assembly GmbH. These segments are based on the markets that are
served and the products that are provided to those markets. Each segment has
its own sales and distribution channels and has a manager who reports directly
to the President and Chief Operating Officer.

The following is a discussion of sales to external customers and segment profit
(loss) for each reportable segment. In the measure of segment profit (loss)
(Segment Profit (Loss)), SBS does not allocate the following to these
segments:



| |  |  | a majority of the amortization expense associated with acquisitions,
| | - |  | --------------------------------------------------------------------
| |  |  | substantially all interest income earned on cash balances, and      
| |  |  | corporate overhead costs, excluding corporate marketing costs.      

Communications and Enterprise Group

|                              |  |                   |  |                |  |  |  | 
|----------------------------- |  | ----------------- |  | -------------- |  |  |  | 
|                              |  | Sales to External |  | Segment Profit
|Six months ended December 31, |  | Customers         |  | (Loss)        
|                              |  |                   |  |               
|FY03                          |  | $12.3 million     |  | $(2.7) million
|FY02                          |  | $19.5 million     |  | $(8.7) million

For the six-month period ended December 31, 2002, Communications and Enterprise
Group sales to external customers decreased 37.0%, or $7.2 million, from $19.5
million for the six-month period ended December 31, 2001 to $12.3 million. This decrease was primarily due to the
continued depressed market and economic conditions affecting this Group. This
Group continues to experience customer delays of existing backlog and
cancellations of backlog orders by the Groups telecommunications
infrastructure customers. SBS expects sales in the quarter ending March 31,
2003 to be consistent with the quarter ended
December 31, 2002, although actual results may vary.

For the six-month period ended December 31, 2002, Communications and Enterprise
Group Segment Loss was ($2.7) million, compared to $(8.7) million for the
six-month period ended December 31, 2001. The reduction in the Groups segment
loss in fiscal 2003 was primarily due to significant inventory write-downs
recorded in fiscal 2002 that were not present in fiscal 2003, coupled with
reduced R&D expenses in fiscal 2003 as a result of the continued depressed
market and economic conditions. In addition, lower sales and

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SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of
Financial Condition and Results of Operations
December 31, 2002
(Continued)

gross profit also affected the fiscal 2003 results. The inventory write-downs
of $7.6 million recorded in fiscal 2002 were associated with programs that were
not anticipated to come back to their previous forecasts and with SBS decision
to exit its legacy PCI chassis product line. For these reasons, for the
six-month period ended December 31, 2002, Segment Profit (Loss) as a percent of
sales changed from (44.6)% for the six-month period ended December 31, 2001 to
(22.0)%.

Commercial and Government Group

|                              |  |                   |  |              |  |  |  | 
|----------------------------- |  | ----------------- |  | ------------ |  |  |  | 
|                              |  | Sales to External |  | Segment     
|Six months ended December 31, |  | Customers         |  | Profit      
|                              |  |                   |  |             
|FY03                          |  | $44.8 million     |  | $9.9 million
|FY02                          |  | $41.2 million     |  | $4.5 million

For the six-month period ended December 31, 2002, Commercial and Government
Group sales to external customers increased 8.7%, or $3.6 million from $41.2
million for the six-month period ended December 31, 2001 to $44.8 million. Unit shipments in fiscal 2003 increased
across all of the Groups product lines with the exception of avionics and
telemetry product shipments, which were consistent with fiscal 2002. SBS
expects sales in the quarter ending March 31, 2003 to be consistent with the
quarter ended December 31, 2002; however, actual results may vary.

For the six-month period ended December 31, 2002, Commercial and Government
Group Segment Profit was $9.9 million, compared to $4.5 million for the
six-month period ended December 31, 2001. The increase in fiscal 2003 was
primarily due to the increase in sales combined with a change in sales mix to
products with higher gross margins and decreased SG&A expenses as a result of
the cost reduction efforts implemented during the past several quarters. In
addition, there were significant inventory write-downs recorded in fiscal 2002
that were not present in fiscal 2003. In fiscal 2002, a $4.8 million inventory
write-down and $185,000 of expenditures associated with SBS manufacturing
consolidation and cost reduction efforts were recorded. The inventory
write-down in fiscal 2002 consisted of inventory associated with products that
will no longer be marketed and excess component parts based on the
implementation of the new inventory management methodology associated with the
consolidation of SBS manufacturing operations. This was partially offset by
increased R&D expense in fiscal 2003 compared with fiscal 2002 as a result of
the Essential Communications asset acquisition in March 2002. For the same
reasons, for the six-month period ended December 31, 2002, Segment Profit as a
percent of sales increased from 10.9% for the six-month period ended December
31, 2001 to 22.2%.

Three Months Ended December 31, 2002 Compared To Three Months Ended December 31, 2001

Sales.For the three-month period ended December 31, 2002, sales increased
1.0%, or $278,000, from $29.0 million for the three-month period ended December
31, 2001, to $29.3 million. Unit shipments decreased within the Communications
and Enterprise Group, primarily due to the continued depressed market and
economic conditions affecting this Group, customer delays of existing backlog,
and order cancellations. Unit shipments of the Commercial and Government Group
increased across all product lines, partially due to sales related to the
products acquired from the Essential Communications asset acquisition
completed on

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SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of
Financial Condition and Results of Operations
December 31, 2002
(Continued)

March 4, 2002. Management continues to expect no significant improvement in
the communications and commercial markets the remainder of fiscal 2003.
Management continues to expect some growth in sales to government customers the
remainder of fiscal 2003 due to increases in Department of Defense development
and field deployment expenditures. SBS expects consolidated sales for the
quarter ending March 31, 2003 to be consistent with the quarter ended December
31, 2002, although actual results may vary.

Gross Profit.For the three-month period ended December 31, 2002, gross profit
increased $13.8 million, from $1.3 million for the three-month period ended
December 31, 2001, to $15.1 million. The increase in gross profit was
primarily due to the significant inventory write-downs and other charges
recorded in fiscal 2002 that were not present in fiscal 2003. Inventory
write-downs and other charges of $12.6 million were recorded in the quarter
ended December 31, 2001 as discussed previously. Gross profit as a percentage
of sales increased to 51.6% in fiscal 2003 from the 47.8% (excluding the $12.6
million of inventory write-downs and other charges) in the three-month period
ended December 31, 2001. This increase was primarily due to a change in the
sales mix within the Commercial and Government Group to higher margin products.
During the three-month period ended December 31, 2002, SBS consumed
approximately $175,000 of inventory that had been written down to zero cost
during fiscal 2002, increasing gross margin as a percentage of sales by 0.6%.
Based on managements sales projections for the third quarter of fiscal 2003,
gross profit as a percentage of sales is expected to be slightly less than the
50.0% experienced during the six-months ended December 31, 2002; however,
actual results may vary.

Selling, General and Administrative Expense.For the three-month period ended
December 31, 2002, selling, general and administrative (SG&A) expense decreased
12.7%, or $1.3 million from $9.8 million for the three-month period ended
December 31, 2001, to $8.5 million. This decrease was primarily due to the
cost reductions implemented throughout the quarters ended June 30, 2002 and
September 30, 2002. For these reasons, for the three-month period ended
December 31, 2002, SG&A expense as a percentage of sales decreased from 33.7%
for the quarter ended December 31, 2001, to 29.2%.

Research and Development Expense.For the three-month period ended December
31, 2002, research and development (R&D) expense increased 5.2%, or $233,000,
from $4.5 million for the three-month period ended December 31, 2001, to $4.7
million. The increase was primarily due to the addition of research and
development employees as a result of the acquisition of the assets of Essential
Communications completed on March 4, 2002. For the three-month period ended
December 31, 2002, R&D expense as a percentage of sales increased to 16.2% from
15.5% in the three-month period ended December 31, 2001.

Severance and Other Exit Costs.For the quarter ended December 31, 2002, SBS
recorded severance and other exit costs of $234,000 which included lease
termination costs of approximately $186,000 paid as a result of SBS decision
to exit certain locations. Due to the continued depressed economic and market
conditions facing its Communications and Enterprise Group, on July 22, 2002,
SBS notified 19 full and part-time employees at its Madison, Wisconsin
engineering design center that their jobs had been eliminated. Additionally,
for the same reason, on September 30, 2002, SBS notified 22 employees of the
Communications and Enterprise Group that their jobs were being eliminated.
Also, during the six months ended December 31, 2002, severance costs were
incurred for 12 other employees who were notified that their jobs had been
eliminated. As of December 31, 2002, there were no severance and other exit
costs remaining to be paid from the exit plans discussed previously.

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##### Table of Contents



SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of
Financial Condition and Results of Operations
December 31, 2002
(Continued)

Impairment of Assets. There were no asset impairment charges recorded in the
three-month period ended December 31, 2002. For the three-month period ended
December 31, 2001, the $2.7 million asset impairment charge represented the
write-off of the remaining goodwill recorded in connection with the acquisition
of Industrial Computers (formerly Micro Alliance) in November 1997. The
write-off was due to SBS decision to exit the PCI chassis business in the
quarter ended December 31, 2001.

Amortization of Intangible Assets.For the three-month period ended December
31, 2002, amortization of intangible assets was $452,000, compared to $1.9
million for the three-month period ended December 31, 2001. Effective July 1,
2002, SBS adopted SFAS 142, Goodwill and Other Intangible Assets, and no
longer amortizes goodwill. As of the date of adoption, SBS had unamortized
goodwill of approximately $20.5 million, subject to the transition provisions
of SFAS 142. There was no goodwill amortization expense for the three-month
period ended December 31, 2002, whereas goodwill amortization amounted to
approximately $1.2 million for the three-month period ended December 31, 2001.

Interest and Other Income (Expense), Net.For the three-month period ended
December 31, 2002, net interest and other income of $100,000 consisted
primarily of interest income associated with surplus cash. For the three-month
period ended December 31, 2001, net interest and other expense of $(159,000)
consisted primarily of a $323,000 write-down of SBS investment in a software
company due to an other-than temporary decline in value, partially offset by
interest income associated with surplus cash.

Income Tax Expense (Benefit).For the three-month periods ended December 31,
2002 and 2001, income tax expense (benefit) represented effective rates of
30.6% and (36.4)%, respectively. The decrease in the effective income tax rate
was due to the impact of a change in the mix of pre-tax income from domestic
and foreign sources coupled with benefits realized from tax planning strategies
in excess of previous estimates. A tax benefit related to the net loss in
fiscal 2002 was recorded primarily due to SBS ability to realize the benefit
through tax loss carrybacks to prior periods.

Earnings Per Share.For the three-month period ended December 31, 2002, net
income per common share and net income per common share  assuming dilution
was $0.06 compared to net loss per share and net loss per common
share  assuming dilution of $(0.78) for the three-month period ended December 31, 2001.

Review of Business Segments

SBS operates internationally through two operating segments: the Communications
and Enterprise Group and the Commercial and Government Group. These segments
are based on the markets that are served and the products that are provided to
those markets. Each segment has its own sales and distribution channels and
has a manager who reports directly to the President and Chief Operating Officer.

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SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of
Financial Condition and Results of Operations
December 31, 2002
(Continued)

The following is a discussion of sales to external customers and segment profit
(loss) for each reportable segment. In the measure of segment profit (loss)
(Segment Profit (Loss)), SBS does not allocate the following to these
segments:



| |  |  | a majority of the amortization expense associated with acquisitions,
| | - |  | --------------------------------------------------------------------
| |  |  | substantially all interest income earned on cash balances, and      
| |  |  | corporate overhead costs, excluding corporate marketing costs.      

Communications and Enterprise Group

|                                |  |                   |  |                |  |  |  | 
|------------------------------- |  | ----------------- |  | -------------- |  |  |  | 
|                                |  | Sales to External |  | Segment Profit
|Three months ended December 31, |  | Customers         |  | (Loss)        
|                                |  |                   |  |               
|FY03                            |  | $5.4 million      |  | $(1.0) million
|FY02                            |  | $9.1 million      |  | $(9.5) million

For the three-month period ended December 31, 2002, Communications and
Enterprise Group sales to external customers decreased 40.7%, or $3.7 million,
from $9.1 million for the three-month period ended December 31, 2001, to $5.4
million. This decrease was primarily due to the continued depressed market and
economic conditions affecting this Group. This Group continues to experience
customer delays of existing backlog and cancellations of backlog orders by the
Groups telecommunications infrastructure customers. SBS expects sales in the
quarter ending March 31, 2003 to be consistent with the quarter ended
December 31, 2002; however, actual results may vary.

For the three-month period ended December 31, 2002, Communications and
Enterprise Group Segment Loss was $(1.0) million, compared to $(9.5) million
for the three-month period ended December 31, 2001. The reduction in the loss
was primarily due to significant inventory write-downs recorded in fiscal 2002,
a total of $7.6 million, which were not present in fiscal 2003, combined with
lower SG&A and R&D expenses in fiscal 2003 resulting from the cost reductions
implemented over the past several quarters. This was partially offset by the
decrease in sales, a change in product mix to lower margin products in fiscal
2003, and severance and other exit costs paid during the fiscal 2003 quarter.
For the same reasons, for the three-month period ended December 31, 2002,
Segment Profit (Loss) as a percentage of sales improved from (104.4)% for the
three-month period ended December 31, 2001 to (18.5)%.

Commercial and Government Group

|                                |  |                   |  |                 |  |  |  | 
|------------------------------- |  | ----------------- |  | --------------- |  |  |  | 
|                                |  | Sales to External |  | Segment Profit 
|Three months ended December 31, |  | Customers         |  | (Loss)         
|                                |  |                   |  |                
|FY03                            |  | $23.9 million     |  | $  5.4  million
|FY02                            |  | $19.9 million     |  | $(0.4) million 

For the three-month period ended December 31, 2002, Commercial and Government
Group sales to external customers increased 20.1%, or $4.0 million from $19.9
million for the three-month period ended

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SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of
Financial Condition and Results of Operations
December 31, 2002
(Continued)

December 31, 2001 to $23.9 million. Sales increased across all product lines
in fiscal 2003, including sales of products acquired from the Essential
Communications asset acquisition completed on March 4, 2002. SBS expects sales
in the quarter ending March 31, 2003 to be consistent with the quarter ended
December 31, 2002, although actual results may vary.

For the three-month period ended December 31, 2002, Commercial and Government
Group Segment Profit (Loss) was $5.4 million, compared to $(0.4) million for
the three-month period ended December 31, 2001. This increase in fiscal 2003
was primarily due to the increase in sales combined with a change in sales mix
to higher margin products during fiscal 2003. In addition, there were
significant inventory write-downs recorded in fiscal 2002 that were not present
in fiscal 2003. In fiscal 2002, a $4.8 million inventory write-down and
$185,000 of expenditures associated with SBS manufacturing consolidation and
cost reduction efforts were recorded. The inventory write-down in fiscal 2002
consisted of inventory associated with products no longer marketed and excess
component parts based on the implementation of the new inventory management
methodology associated with the consolidation of SBS manufacturing operations.
SG&A expenses were also reduced in fiscal 2003 as compared to fiscal 2002 due
to the cost reductions implemented during the past several quarters. This was
partially offset by increased R&D expense in fiscal 2003 compared with fiscal
2002 as a result of the Essential Communications asset acquisition in March
2002. For the same reasons, Segment Profit (Loss) as a percentage of sales
improved from (2.0)% for the three-month period ended December 31, 2001 to
22.6% for the three-month period ended December 31, 2002.

Liquidity and Financial Condition

SBS uses a combination of the sale of equity securities, internally generated
funds and bank borrowings to finance its acquisitions, working capital
requirements, capital expenditures and operations.

Cash totaled $25.2 million at December 31, 2002, unchanged from June 30, 2002.
Net cash provided by operating activities was $1.3 million and proceeds from
the exercise of stock options totaled $13,000. These cash inflows were offset
by $200,000 used for the purchase of a license agreement, $666,000 used for the
purchase of capital equipment, and $321,000 used to repurchase 46,000 shares of
SBS common stock pursuant to a repurchase plan initially adopted for a one year
period by the Board of Directors on September 14, 2001 and extended until September 13, 2003. That plan allows for
the repurchase of up to 1,000,000 shares of SBS Common Stock at an aggregate
cost not to exceed $8,000,000. During the six-month period ended December 31,
2002, accounts receivable increased $1.6 million due primarily to increases in
sales in December 2002 as compared to June 2002, and inventory increased
$828,000, prior to foreign currency translation adjustments of $212,000, due
principally to products built and held for customer shipments anticipated for
early in the third quarter. Liabilities were in line with the current level of
business.

At June 30, 2002, SBS was out of compliance with the cash flow coverage ratio
covenant of its amended $30.0 million Credit Agreement (Agreement) with Bank
of America, N.A., primarily due to the inventory write-down and charges for
impairment of identifiable intangibles and goodwill recorded in the fourth
quarter of fiscal 2002. At no time during fiscal 2003 were any borrowings drawn
on the Agreement. On September 20, 2002, SBS canceled the Agreement.
Management does not believe, as of the date of this report and based upon
managements assessment of future cash needs and sources of cash, that SBS
liquidity needs require SBS to have a credit facility in place at this time.

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SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of
Financial Condition and Results of Operations
December 31, 2002
(Continued)

Management believes that SBS internally generated funds will be sufficient to
finance its current operations and capital expenditures, excluding
acquisitions, for at least the next twelve months. Because long-term cash flow
cannot be predicted with certainty, it is possible in the future that SBS could
require external financing through bank facilities, the sale of equity or debt
securities, or other sources of capital. The sale of any equity or debt
securities, if required, may result in additional dilution to the shareholders.
SBS cannot be certain that additional financing will be available, in amounts,
or on terms, acceptable to SBS or at all.

As of the date of this report, SBS does not have any material capital
expenditure commitments. As of December 31, 2002, SBS is committed under
noncancelable operating leases that expire at various dates through fiscal
2006, as described in Managements Discussion and Analysis in SBS Annual
Report on Form 10-K for the fiscal year ended June 30, 2002.

For the six-month period ended December 31, 2002, there was no significant
impact from inflation.

New Accounting Standards

In December 2002, the FASB issued SFAS 148, Accounting for Stock-Based
Compensation  Transition and Disclosure, which amends SFAS 123, Accounting
for Stock-Based Compensation, to provide alternative methods of transition for
a voluntary change to the fair value based method of accounting for stock-based
employee compensation. In addition, SFAS 148 amends the disclosure
requirements of SFAS 123 to require prominent disclosures in both annual and
interim financial statements about the method of accounting for stock-based
employee compensation and the effect of the method used on reported results.
SFAS 148 is effective for annual financial statements for fiscal years ending
after December 15, 2002, and for interim financial statements for fiscal
periods beginning after December 15, 2002. SBS does not currently anticipate
changing its method of accounting for stock-based employee compensation to the
fair value based method for the foreseeable future. Accordingly, SBS does not
expect the adoption of SFAS 148 to have a material impact on its financial
statements or results of operations.

In June 2002, the FASB issued SFAS 146, Accounting for Costs Associated with
Exit of Disposal Activities, which addresses financial accounting and
reporting for costs associated with exit of disposal activities and nullifies
EITF Issue No. 94-3 Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring). The principal difference between SFAS 146 and EITF 94-3
is SFAS 146s requirement for recognition of a liability for a cost associated
with an exit or disposal activity. SFAS 146 requires that a liability be
recognized when the liability is incurred. Under EITF 94-3, a liability for an
exit cost was recognized at the date of an entitys commitment to an exit plan.
SFAS 146 also establishes that fair value is the objective for initial
measurement of the liability. The provisions of SFAS 146 are effective for
exit or disposal activities that are initiated after December 31, 2002. SBS
does not expect the adoption of SFAS 146 to have a material impact on its
financial statements or results of operations.

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##### Table of Contents



SBS Technologies, Inc. and Subsidiaries
Managements Discussion and Analysis of
Financial Condition and Results of Operations
December 31, 2002
(Continued)

Business Outlook

Consistent with SBS press release dated January 16, 2003, management expects
sales for the quarter ending March 31, 2003, assuming similar market
conditions, to be consistent with the second quarter. For the longer term, if
the health of our customers businesses improves, management believes that SBS
is now structured so that any resulting increase in sales should result in
operating income leverage, assuming gross margins within our historic range,
excluding any transitional impairment charges and costs associated with any
future asset write-offs caused by unfavorable customer circumstances.

Management expects that corporate representatives of SBS will meet privately
during the quarter with investors, investment analysts, the media and others,
and may reiterate the Business Outlook published in this Form 10-Q. At the
same time, this Form 10-Q and the included Business Outlook will remain
publicly available on our Web site (www.sbs.com). Unless a notice stating
otherwise is published, the public can continue to rely on the Business Outlook
published on the Web site as representing SBS current expectations on matters
covered.




Quantitative and Qualitative Disclosures about Market Risk

SBS liquid investment is cash invested in either money market accounts or in
overnight repurchase agreements. Due to the nature of these investments, SBS
believes that the market risk related to these investments is minimal.

SBS, as a result of its German operating and financing activities, is exposed
to market risk from changes in foreign currency exchange rates. To date, SBS
has not entered into any foreign exchange forward contracts to reduce exposure
to changes in foreign currency exchange rates.




Controls and Procedures

(a)  Evaluation of disclosure controls and procedures.Based on their
evaluation, with the participation of management, as of a date within 90 days
of the filing date of this Quarterly Report on Form 10-Q, our principal
executive officer and principal financial officer have concluded that our
disclosure controls and procedures (as defined in Rules 13a-14 and 15d-14 under
the Securities Exchange Act of 1934 (the Exchange Act)) are effective to
ensure that information required to be disclosed by us in reports that we file
or submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange
Commission rules and forms.

(b)  Changes in internal controls. There were no significant changes in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

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##### Table of Contents






PART II  OTHER INFORMATION




Item 1. Legal Proceedings



| |  | During the six-month period ended December 31, 2002, SBS received notice
of a claim for patent infringement regarding the sale of SBS PCMCIA
product line. As of December 31, 2002, management was evaluating the
claim and attempting to reach a settlement. As a result, an estimate for
the possible loss was recorded in the quarter ended December 31, 2002
based on our belief that a settlement was probable. On February 4, 2003,
SBS entered into an agreement to settle the claim for an amount
consistent with our estimate.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------




Item 4. Submission of Matters to a Vote of Security Holders



| |  | The following items were submitted to a vote and approved at the Annual
Meeting of Shareholders held on November 14, 2002:
| |  | --------------------------------------------------------------------------------------------------------------------------

TABULATION OF VOTES

| |                                                                                                    |     |  |                     |  |                  |  |         |  |  |                 |       | 
| | -------------------------------------------------------------------------------------------------- | --- |  | ------------------- |  | ---------------- |  | ------- |  |  | --------------- | ----- | 
| |                                                                                                    |     |  |                     |  |                  |  |         |  |  | Abstentions and
| | Item Voted                                                                                         | For |  | Against or Withheld |  | Broker Non-Votes
| |                                                                                                    |     |  |                     |  |                  | 
| | Election of Directors:                                                                             |     |  |                     |  |                  |  |         |  |  |                 |      
| | Christopher J. Amenson                                                                             |     |  | 13,869,678          |  |                  |  | 86,488  |  |  |                 |       | 
| | Warren W. Andrews                                                                                  |     |  | 13,565,882          |  |                  |  | 390,284 |  |  |                 |       | 
| | Lawrence A. Bennigson                                                                              |     |  | 13,558,504          |  |                  |  | 397,662 |  |  |                 |       | 
| | Peter D. Fenner                                                                                    |     |  | 13,555,604          |  |                  |  | 400,562 |  |  |                 |       | 
| | Louis C. Golm                                                                                      |     |  | 13,559,604          |  |                  |  | 396,562 |  |  |                 |       | 
| | Alan F. White                                                                                      |     |  | 13,559,704          |  |                  |  | 396,462 |  |  |                 |       | 
| | Ratification of KPMG LLP
as the Companys independent auditor for fiscal year ending June 30, 2003 |     |  | 13,406,423          |  |                  |  | 542,809 |  |  |                 | 6,934 | 

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Item 6. Exhibits and Reports on Form 8-K.

|    |  |                                                                         
|--- |  | ------------------------------------------------------------------------
|(a) |  | Exhibits (exhibit reference numbers refer to Item 601 of Regulation S-K)

| |  |       |  |  |     |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  | ----- |  |  | --- |  |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 03.i  |  |  | (1) |  |  | Restated Articles of Incorporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |  | 03.ii |  |  | (1) |  |  | Restated and Amended Bylaws.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | 04.a  |  |  | (1) |  |  | Article VI of the Restated Articles of Incorporation, as included
in the Restated Articles of Incorporation of SBS Technologies, Inc.                                                                                                                                                                                                                                                                                                                                                                                          
| |  | 04.b  |  |  | (1) |  |  | Articles I and II of the Restated and Amended Bylaws of SBS Technologies, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | 04.c  |  |  | (1) |  |  | Form of certificate evidencing Common Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | 04.1  |  |  | (1) |  |  | Rights Agreement dated September 15, 1997 between SBS
Technologies, Inc. and First Security Bank (now Wells Fargo),
National Association, as Rights Agent, which includes the form of
Right Certificate as Exhibit A and the Summary of Rights to Purchase
Common Stock as Exhibit B.2 and Agreement to Serve as Rights Agent;
on January 21, 1998, pursuant to Section 21 of the Shareholder
Rights Agreement dated September 15, 1997, SBS appointed Norwest
Bank Minnesota N.A. (now Wells Fargo) as Successor Rights Agent.
| |  | 99.1  |  |  | (1) |  |  | Certification of Christopher J. Amenson, Chairman and Chief
Executive Officer, Pursuant to 18 U.S.C. Section 1350 As Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                        
| |  | 99.2  |  |  | (1) |  |  | Certification of James E. Dixon, Jr., Chief Financial Officer,
Pursuant to 18 U.S.C. Section 1350 As Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                        
| |  |       |  |  |     |  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |  |       |  |  |     |  |  | (1) See Exhibit Index                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

|    |  |                           
|--- |  | --------------------------
|(b) |  | Reports on Form 8-K  None

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                        |  |                                                                            
|----------------------- |  | ---------------------------------------------------------------------------
|                        |  | SBS TECHNOLOGIES, INC.                                                     
|                       
|                       
|                       
|Date: February 13, 2003 |  | /s/ Christopher J. AmensonChief Executive Officer
and Chairman of the Board
|                       
|                       
|Date: February 13, 2003 |  | /s/ James E. Dixon Jr.Executive Vice President and
Chief Financial Officer 

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##### Table of Contents






CERTIFICATION

I, Christopher J. Amenson, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of SBS Technologies, Inc.;                                                                                                                                                                                                                                                 
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in the Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:                                                                                                 



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weaknesses
in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|       |  |                   |  |                                                                                       
|------ |  | ----------------- |  | --------------------------------------------------------------------------------------
|Dated: |  | February 12, 2003 |  |                                                                                       
|      
|       |  |                   |  | /s/ Christopher J. Amenson
Christopher J. Amenson
Chairman and Chief Executive Officer

Page 30



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##### Table of Contents



CERTIFICATION

I, James E. Dixon, Jr., certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of SBS Technologies, Inc.;                                                                                                                                                                                                                                                 
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in the Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:                                                                                                 



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weaknesses
in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|       |  |                   |  |                                                                                                 
|------ |  | ----------------- |  | ------------------------------------------------------------------------------------------------
|Dated: |  | February 12, 2003 |  |                                                                                                 
|      
|       |  |                   |  | /s/ James E. Dixon, Jr.
James E. Dixon, Jr.
Executive Vice President and
Chief Financial Officer

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SBC TECHNOLOGIES, INC. AND SUBSIDIARIESEXHIBIT
INDEX

|               |  |             |     |                  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                              
|-------------- |  | ----------- | --- | ---------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------
|Exhibit Number |  | Description |     | Method of Filing
|               |  |             |     |                 
|03.i           |  |             | (1) |                  |  | Restated Articles of Incorporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  |                             
|03.ii          |  |             | (2) |                  |  | Restated and Amended Bylaws                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |                             
|04.a           |  |             | (1) |                  |  | Article VI of the Restated Articles of
Incorporation, as included in the Restated
Articles of Incorporation of SBS Technologies, Inc.                                                                                                                                                                                                                                                                                                                                                                                            |  |                             
|04.b           |  |             | (2) |                  |  | Articles I and II of the Restated and Amended
Bylaws of SBS Technologies, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |                             
|04.c           |  |             | (3) |                  |  | Form of certificate evidencing Common stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  |                             
|04.1           |  |             | (4) |                  |  | Rights Agreement dated September 15, 1997 between
SBS Technologies, Inc. and First Security Bank
(now Wells Fargo), National Association, as
Rights Agent, which includes the form of Right
Certificate as Exhibit A and the Summary of
Rights to Purchase Common Stock as Exhibit B.2,
and Agreement to Serve as Rights Agent; on
January 21, 1998, pursuant to Section 21 of the
Shareholder Rights Agreement dated September 15,
1997, SBS appointed Norwest Bank Minnesota N.A.
(now Wells Fargo) as Successor Rights Agent. |  |                             
|99.1           |  |             |     |                  |  | Certification of Christopher J. Amenson, Chairman
and Chief Executive Officer, Pursuant to 18
U.S.C. Section 1350 As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                          |  | Filed herewith electronically
|99.2           |  |             |     |                  |  | Certification of James E. Dixon, Jr., Chief
Financial Officer, Pursuant to 18 U.S.C. Section
1350 As Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                          |  | Filed herewith electronically



---

|(1) |  | Incorporated by reference to
Exhibit 3.i, of the
Registrants
Quarterly Report on
Form 10-Q for the
quarter ended
September 30, 2000. 
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Incorporated by
reference to
Exhibit 3.ii, of
the Registrants
Quarterly Report on
Form 10-Q for the
quarter ended
September 30, 2000.
|   
|(3) |  | Incorporated by
reference to
Exhibit 4.c, of the
Registrants
Quarterly Report on
Form 10-Q for the
quarter ended March
31, 2001.     
|   
|(4) |  | Incorporated by
reference to
Exhibit 4.1 of the
Registrants Annual
Report on Form 10-K
for the year ended
June 30, 2002.             

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